By Ben Kerrigan-
The U.S has threatened to increase tariffs up to 25% on a host of UK exports in retaliation for a UK tax on tech firms.
Ceramics, make-up, overcoats, games consoles and furniture could all be affected, according to a list published by the Biden administration.
The duties are designed to raise $325m (£235.8m), the exact amount the US believes the UK will raise from US tech firms.
Although the White House is being disuaded from continuing with it’s plans, Biden’s administration is pressing ahead with the action, originally implemented under President Donald Trump, and has scheduled hearings on the list.
It argues the recently introduced digital services tax – which taxes tech firms on their revenues – has “unreasonable, discriminatory, and burdensome attributes”.
The plans are not a brilliant start to the historical transatlantic relationship between the UK and the U.S, which has appeared relatively fragile ever since Biden’s administration expressed disapproval for the UK’s stance on Brexit, in relation to the Irish Boarder.
Political relationships between countries can often be seasonal, depending on who is in power, and how the political ideologies of two countries blend or diverge.
Similar actions were implemented against similar taxes in India, Austria and Spain, but action against the European Union as a whole was dropped.
The US Section 301 action is designed to apply domestic political pressure within the UK and other countries over the imposition of such taxes.
The UK government sources emphasised last December that the tariff list was being seen as procedural, rather than an escalation.
The tariffs are now subject to a consultation in the US over the next few weeks.
UK ceramics are on the US Trade Representative’s list, including certain tiles, bathroom ware like sinks and bidets, as well as ceramics for laboratory uses.
About £17m of these products were exported to the US in 2020, and £24m in 2019 before Covid.
Meanwhile Adam Mansell, head of the UK Fashion & Textile Association (UKFT), called the threat to UK-made overcoats “hugely disappointing”, noting the limited removal of separate tariffs on other types of fashion goods, such as British cashmere last month.
“At a time when we are trying to start discussions over a UK-US trade deal, it is extremely important that both governments get around the table to remove this threat as soon as possible,” he said.
“With the industry still struggling with the impact of Covid-19 and understanding the new trade arrangements with the EU, an additional burden on our exports couldn’t come at a worse time.”
It followed years of claims in Europe and elsewhere that big tech firms do not pay enough tax in the countries where they operate.
Last August, Facebook agreed to pay the French government €106m (£95.7m) in back taxes to settle a dispute over revenues earned in the country.
Earlier that year, Facebook boss Mark Zuckerberg said he recognised the public’s frustration over the amount of tax paid by tech giants.
Temporary
A UK government spokesperson said: “Like many countries around the world, we want to make sure tech firms pay their fair share of tax. Our digital services tax (DST) is reasonable, proportionate and non-discriminatory.
“It’s also temporary. We’re working positively with the US and other international partners to find a global solution to this problem and will remove the DST when that is in place.”
There are signs the Biden administration wants a more conciliatory relationship on trade with the UK than Donald Trump did.
Last month, Washington agreed to suspend tariffs on UK goods, including single malt whiskies, that were imposed in retaliation over subsidies to aircraft maker Airbus. However, the UK is still lobbying the US to drop duties on British steel brought in in 2018.